It has been no open secret that a large part of black money generated in any form has conventionally been diverted to the acquisition of real estate assets for the past several years. This, in turn, has led to an exponential increase in real estate valuations. Information backed by credible data sources alludes to the fact that the real estate sector in the country is hub to Benami transactions. A property transaction can be termed as Benami where the beneficiary and real owner is hidden behind the person who is shown as the owner in the records as the registered owner of the property. A key challenge for the government arose in the form of assessing the correct number of Benami property transactions in India. In fact, this could be described as one of the main reasons why the government was compelled to declare Benami transactions a criminal offence under the Benami Transactions (Prohibition) Amendment Act 2016.
Establishing the money trial of a Benami transaction can be a complicated task. In order to prove the veracity of an unscrupulous transaction, it becomes essential to lift the veil and differentiate between the actual owner and the owner whose name is registered in the records. It is easy to hide the trail of the money paid to acquire the real estate and the name of the actual beneficial owner if there is a way to hide the identity of the party acquiring the real estate.
With an aim to curbing corruption, black money generation and keeping a check on ‘Benami’ transactions in real estate, a plea was filed in the Delhi High Court seeking the linking of property documents of citizens with their Aadhaar number. The Delhi High Court, on October 15, 2019 has sought the response of the Unique Identification Authority of India (UIDAI) on the plea and the matter is subjudice. The roll-out of Aadhaar-driven linkage for property registration is being envisaged as a key structural reform and policy decision to ensure transparency and accountability in the real estate sector. In addition to key reforms like demonetization and the implementation of RERA, Aadhaar authentication of property documents would act as an additional verification layer and deter unscrupulous investors from indulging in fraudulent practices in real estate.
A key benefit derived from the linking of Aadhaar card details to real estate purchase will be the easy identification of the actual seller and buyer when property sale and purchase is undertaken. At the click of a mouse, it will become easy to establish the actual number of properties held in the name of a particular person. If the Aadhaar card of a prospective seller or buyer is linked to property acquisition, it would become difficult or rather impossible to conceal the identity of the actual owner. It would also help in substantially reducing and, over a period of time, eliminating cash transactions in the Indian real estate sector.
With real estate transactions and property purchases becoming less opaque, the real estate sector would become less murky. Persons who claim to represent agencies indulging in criminal activities or handling proceeds of crime in the form of black money will find it virtually impossible to use illegal funds to acquire real estate assets in Benami form.
Aadhaar authentication is also a key step in making the real estate sector more formalized and structurally organized. It will go a long way in establishing ease of transactions in property purchases and emerge as a key factor in attaining the government’s objective of ‘Housing for All’ by 2022. With the creation of a regulated real estate eco-system, the initiative also holds the potential to instil confidence in genuine, hard-working and honest home-buyers with the promise of timely delivery of housing units. It will also prove to be a key factor in reducing the price overhype in Indian real estate and usher in much-needed price rationalization in the sector to make home-buying transactions an increasingly affordable proposition.